Why we want to retire?
There are many reasons why we want to retire. It could be too much stress at work or health is not in good condition... When we approach the retirement age, 60 or over, we often think more about it. Obviously, there is certain pressure from work or from activities we earn a living.
The answer is clear, we want to get out of the miserable situation as quick as possible, otherwise we will still continue with our job. Some people are lucky having the job they love. They will think less or never think about retirement perhaps.
But retirement actually is a joy rather than a situation that we are forced to accept. That is a goal we want to achieve. So we have to prepare ourselves to reach the goal. Retirement is a joy because we want to live our life to the fullest for ourselves, not to work for somebody. In this sense, retirement is not meaning stop working but rather doing or caring for what we love. Life is short and fragile as we all know. So try to regain our life seems to be a noble thing to do.
Of course, first of all we need to have some kind of confidence in our financial matter. We need a decent house to shelter, to meet friends and to comfort our family...For an average person who lives in this materialistic world, everything must be thought out in a relative term. As we all known, taxes, fees and interests are the main causes of reducing our wealth. There are so many kind of taxes: personal income tax, property tax, sale and services taxes...Interests from the money we borrow such as mortgage, car loan...are large sum of lost money.
In Canada, contribution to RRSP (Registered Retirement Saving Plan) will help you to get back some tax refund. If you can maximize the contribution every year, depending on your tax bracket, the refund could be substantial. You can save this extra money in TFSA (Tax Free Saving Account) and invest this money further for your retirement. You also can use this money to pay down your mortgage. Mortgage is a large amount of money with very big interest to pay. If you already accumulated a sizable sum of money in RRSP you can request bank to set up a Self-Directed RRSP and mortgage your house yourself. This form of investment will help you to pay the interest to yourself instead to the bank. That is a great way to save money.
Some thoughts about preparing for the retirement: House is a shelter but also good investment if the market is favorable. You can down size at retirement time and have some extra money in your pocket. Owning a bigger house means paying more property tax, higher maintenance cost and larger utility bills. Interest cost could be sheltered in Self-Directed RRSP. Credit card balance must be paid off before due date. Buying should be smart, buy what you need not what you want. Shop around for car insurance or everything with a large ticket. Life style will determine your saving, many things in life can be chosen for your need. Frugal living will help you achieve saving target and live fairly free from societal pressure.
Canada is still ranked fairly high in the Global Pension Index in the recent year. In 2013 Canada is in the the same group with Sweden, Switzerland, UK (Grade B, just behind Denmark, Grade A and Netherlands, Australia Grade B+). So we have a fairly good national safety net to rely on, we just need to have some extra saving by living smarter. Only thing you have to keep in mind that when you get older, your health care cost will go up, although basic health care is covered by all provinces. That's all. Enjoy life.
(http://www.globalpensionindex.com/)
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